Stock futures weaken after GDP report surprises

NEW YORK (MarketWatch) -- Stock futures fell, then recovered slightly, as traders digested a dramatic slowdown in fourth-quarter GDP to a 1.1% annual rate, its weakest in three years. As growth slowed, core inflation heated up. The core personal consumption expenditure price index -- which excludes food and energy prices -- rose at a 2.2% annual rate in the quarter, above the Federal Reserve's 1% to 2% target range. In the past year, the core PCE index has increased 1.9%. The report puts the Federal Open Market Committee in a quandary. If growth were to remain tepid, the Fed would be obligated to hold rates steady or even cut them. But the continued inflation pressures argue for higher rates. Against this background, S&P 500 futures were last up 0.70 at 1,278.50, well off their early high of 1,283.50. Dow futures turned negative, and were last down 2 at 10,830.

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